Bulgaria expects fiscal surplus of 2.4 pct at the end of September

Reuters Staff

2 Min Read

SOFIA, Sept 29 (Reuters) - Bulgaria expects a fiscal surplus of 2.4 percent of gross domestic product at the end of September that will help it outperform its 2017 fiscal target, data from the finance ministry showed on Friday.

The finance ministry said the Balkan country’s fiscal surplus of 2.2 percent of GDP at the end of August dropped from 3.7 percent in the same period a year ago due to a base effect of hefty reimbursements on EU-backed projects in 2016.

Spending is expected to pick up in the last quarter, but with an improved forecast for economic growth of about 3.9-4.0 percent for the year.

Finance Minister Vladislav Goranov said he expected the fiscal deficit to be smaller than the targeted deficit of 1.4 percent of gross domestic product.

The Black Sea state has pegged its lev currency to the euro, in a regime that prevents the central bank from setting interest rates and leaves fiscal policy as one of the few tools it has to influence the economy.

Bulgaria ended 2016 with a surplus of 1.6 percent. The finance ministry has said it would target a fiscal deficit of 1 percent next year, but is yet to deliver its detailed 2018 budget draft.

Government revenue in the first eight months of 2017 rose 7.2 percent from the same period in 2016 to 23.2 billion levs, data showed. Spending also rose to 21.1 billion levs from 19.7 billion a year ago.

Fiscal reserves held under the currency regime pegging the lev to the euro stood at 11.6 billion levs at the end of August.